Institutional investors in the local government pension scheme (LGPS) in the UK have filed a shareholder resolution at Shell to obtain clarity about the basis for the oil major’s plan to grow its liquefied natural gas (LNG) business.
The resolution, filed by the Brunel Pension Partnership, Greater Manchester Pension Fund (GMPF) and Merseyside Pension Fund, asks Shell to justify its LNG growth strategy for reasons including that the demand anticipated in the company’s 2024 outlook is higher than in all scenarios published by the International Energy Agency (IEA).
The LGPS investors’ resolution also states that Shell “appears to have misinterpreted independent analysis in substantiating its demand projections”.
The investors are also concerned about the LNG strategy’s implications for Shell’s climate commitments.
Vaishnavi Ravishankar, head of stewardship at Brunel, said the asset pool was “deeply concerned” about the apparent disconnect between Shell’s LNG growth strategy and its stated climate targets and Paris-aligned pathways.
“We need to see further transparency to assess Shell’s alignment with climate goals, particularly in the context of the recent removal of its interim 2035 climate target,” he said. “We are committed to engaging with Shell to enhance the ambition, transparency, and credibility of its climate transition efforts.”
Last year shareholders backed Shell’s diluted decarbonisation strategy, which saw it abandon its 2035 targets, maintain oil production levels, reduce its carbon intensity targets for 2030, and increase its reliance on LNG. This was despite opposition from some asset owners, including Aegon and Brunel.
Bullish outlook
This latest resolution has the backing of co-filer Australasian Centre for Corporate Responsibility (ACCR). NGO ShareAction supported the filing along with more than 100 individual shareholders.
In recent research, the ACCR said that Shell’s LNG growth strategy is based on a “bullish outlook” for LNG demand and risks eroding shareholder value.
A spokesperson for GMPF said Shell’s LNG demand outlook was “more than 300%” above the IEA’s 1.5°C warming scenario and that “the onus is on Shell to explain how this position can be considered credible in the context of the company’s existing climate commitments”.
Shell insists that the growth of LNG is in line with shareholder interests and its own climate strategy.
Speaking to IPE, a Shell spokesperson said: “Shell’s shareholders have strongly backed our strategy to deliver more value with less emissions at successive AGMs, with the growing role of LNG at the heart of this strategy.
“We are confident in the future role of LNG in our strategy, as we transform to become a net-zero emissions energy business by 2050.”
The resolution will come to a vote at Shell’s annual general meeting (AGM), which is due to be held in May 2025.
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